The notion that Beijing has real responsibilities to the international trading system by letting its currency adjust and freeing up its capital account like all the other major players in global finance may be accepted by many academics and senior officials. But it remains a difficult concept to accept for a political leadership flushed by economic success and 60 years of Communist Party rule.
It is only natural for the dollar to be weak. Currency valuation is part of the solution to global trade imbalances. For the United States, the approximate halving of its deficit since its peak two years ago has been due in part to a 15 percent fall in the trade-weighted value of the dollar and partly to the drop in consumption as American households have started to save again. The United States doesn’t need to worry now about a weak dollar anymore than President Nixon did in 1971. It is someone else’s problem.